Establishment of Legal Person
Introduction
The term legal person generally refers to a business entity or organization which is legally recognised as having a separate legal personality and which can own assets, and enter into contracts in its own name. The fact that a legal entity is legally recognised as having a distinct identity can open up various options to the first-time business entrepreneur, such as starting limited companies or setting up branch or subsidiary operations in other states and countries. The establishment of legal person is a process whereby a business entity or organization is created and obtains certain privileges, rights, and responsibilities in its jurisdiction. In this article, we will look at the concept of legal person, the process of establishment, and the benefits and considerations of doing so.
Definition of Legal Person
A legal person is a legal entity which is the subject of legal rights and obligations. It is generally a separate entity from those who create it, and it has its own legal personality which can form contracts and have rights and interests. Depending on the type of business and the jurisdiction, a legal person can also gain independent taxation, banking and other privileges.
Legal entities can be created by nations, states, or other governmental authorities, by particular bodies, such as unincorporated associations or charities, or by private persons, such as corporations, limited companies, and partnerships.
Process of Establishment
The process of establishing a legal person will depend on the jurisdiction in which you want to establish the entity and what you wish it to do. Generally, a legal person will need to be formally registered with the relevant governmental authority or within a particular body, depending on its intended purpose.
In some jurisdictions, you will need to have a minimum capital to register a legal person. This is to ensure that the legal person has enough resources and capacity to fulfil its obligations to creditors and other persons. In addition to this, you will also need to provide evidence of the legal persons membership, directors, and management.
In some cases, a legal person may need to be listed on a stock exchange in order to be recognised by certain jurisdictions. For instance, certain countries may require a company to be listed in order to obtain certain tax advantages.
Benefits and Considerations
One of the key benefits of establishing a legal person is that it can obtain legal person status which can protect its members from personal liability in the event of an issue or dispute. This means that if something goes wrong with the legal person, its members will not be held personally liable and will not bear the risk of any loss or damage to their personal possessions.
In addition to this, a legal person can provide members with certain financial and taxation benefits. For instance, the legal person can obtain advance clearance or tax breaks that can be beneficial to the members. Furthermore, it can also provide the members with certain protections when it comes to acquiring land or property, or when they wish to conduct business in a different jurisdiction.
Conclusion
The establishment of a legal person can open up various benefits to first-time business entrepreneurs. It provides a legal entity with its own unique identity which can be used for contractual, financial and taxation purposes. However, it is important to understand the processes and considerations when it comes to establishing a legal person, in order to ensure the best possible outcome for both the business and its members.
